Domestic maltsters and the Canadian Wheat Board are trying to keep enough malting barley flowing to maltsters, but the next few months will be like balancing on a razor’s edge.
“It’s tight, that’s for sure,” said senior board barley marketer Bob Cuthbert about whether the CWB will be able to meet all of its malting barley commitments for the 2006-07 crop year.
“It’s going to be tight.”
Most marketers and analysts say little can be done to attract malting barley this year beyond what’s already being done.
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Most buyers are already offering enticements such as premiums above the CWB malting barley pool and interest and storage incentives, but the red hot feed barley market is sucking up all the grain it can find.
With cash feed prices often better than the malting barley Pool Return Outlook, there’s little to attract most farmers. And those who are locked into board contracts are trying to find ways to escape.
“They’re asking how they can get out of these wheat board malt contracts,” said farmer adviser John Duvenaud.
World malting barley prices are still above feed barley prices, but that doesn’t appear in the CWB’s PRO because lower value sales from earlier in the year are averaged in the PRO, clouding the price signal.
Cuthbert said the problem with the inversion of the feed-malting price relationship has not resulted in lost sales opportunities.
The high prices have made Chinese buyers back away from the market. Instead, they are relying on domestic barley and cutting the amount of malt they use in brewing.
Maltsters have already turned their attention to 2007-08 to ensure they aren’t left out of farmers’ plans.
Pat Rowan of BARI Canada, an arm of Anheuser-Busch, is trying to convince farmers that malting barley will regain its premium next crop year, although it’s hard to offer firm price predictions now.
“We’re going out there the best we can to encourage the seeding of barley,” said Rowan, who has attended prairie farm shows to promote malting barley acres.
“Hopefully, the farmers will respond to it and put some barley in the ground.”
The cash market price for feed barley is in everyone’s mind right now.
“That’s one point they bring up, but we point out that feed prices for next year are already higher and malt will definitely be a premium to the feed,” said Rowan.
Anderson said even today’s malt market might be more attractive than it appears at first glance. Maltsters are throwing in a lot of incentives.
“They’re trying their darnedest,” said Anderson.
If a farmer is still considering selling uncommitted barley as malt, he advises them to call around first to get the most incentives possible.
“Go to the malt buyer and see what incentives are available,” he said.
